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Bitcoin dropped sharply on Friday, slipping below the psychologically significant $80,000 level as investors reacted to escalating U.S. trade tariff concerns and positioned themselves ahead of a key inflation report. The leading cryptocurrency declined 8.4% to $78,955.9 as of 02:11 ET (07:11 GMT), marking a loss of over 22% in February and nearly 27% from its all-time high of $108,000 reached following President Donald Trump’s election victory.
Bitcoin initially rallied on optimism surrounding potential pro-cryptocurrency policies under the Trump administration. However, the market has since reversed course, pressured by renewed trade policy concerns and the Federal Reserve’s hawkish stance in December. The past six weeks have seen a sustained downward trend, with investors reassessing risk exposure in response to macroeconomic developments.
Tariff Concerns and Inflation Data Weigh on Crypto Markets
The latest sell-off coincides with heightened uncertainty over U.S. trade policy. President Trump reaffirmed the March 4 implementation of a 25% tariff on imports from Mexico and Canada while also announcing an additional 10% levy on Chinese goods. These measures have intensified fears of a prolonged trade dispute, leading investors to shift away from risk-sensitive assets, including cryptocurrencies.
Adding to market caution, traders are closely watching the release of the U.S. Personal Consumption Expenditures (PCE) price index, the Federal Reserve’s preferred measure of inflation. Expectations indicate a 0.3% month-over-month increase, with core inflation forecasted at 2.6% year-over-year and the headline figure projected at 2.4%. Persistent inflationary pressures could influence the Fed’s future monetary policy decisions, particularly regarding interest rates.
With the prospect of sustained inflation and a stronger U.S. dollar, many Bitcoin holders have reduced their positions to mitigate potential downside risks. Higher interest rates and a firmer dollar typically weigh on speculative assets, including cryptocurrencies, as investors seek safer alternatives.
Altcoins Face Heavy Losses as Market Sentiment Deteriorates
The broader cryptocurrency market mirrored Bitcoin’s decline, with most altcoins registering double-digit losses. Ethereum, the second-largest cryptocurrency by market capitalization, dropped 10.6% to $2,108.50 and was on track for a 36% decline in February.
Other major cryptocurrencies followed suit, with XRP losing 10% to trade at $2.0125, reflecting a 34% drop for the month. Solana and Cardano fell 9.2% and 12%, respectively, while Polygon declined 7.8%.
Meme tokens also saw significant declines, with Dogecoin down 11.4% and the $TRUMP token falling 15.2%.
The cryptocurrency market remains under pressure as investors navigate ongoing trade tensions, monetary policy uncertainty, and broader risk-off sentiment. The upcoming PCE inflation data is expected to provide further clarity on the Federal Reserve’s stance, which could dictate the near-term trajectory for digital assets.
